Mr. Gerry Fitzpatrick:

As I say, in terms of the audit process and making sure that it's properly understood is a challenge auditors have had from time immemorial in terms of expectations. When you say the organisation was in a mess, it subsequently had challenges because of asset values. At the points of measurement, an audit can only establish that the records and transactions that have happened are properly reflected, that they're measured in accordance with accounting policies, and there are very, very substantial judgments that underpin the calculations, and I think the financial statements are quite lengthy, I understand, 80 pages. In fact, there's many ... many ... more detailed notes in new standards that have caused ... will be even more lengthy. But the financial statements present a picture of the point in time. They analyse the extent of risks. They show the level of judgments.

But this is not an insurance policy or a prediction of the future. It's saying, at this point in time, have things been measured correctly looking at the historic situation. And it's not saying, as in an accounting standard, for instance, on impairment, that you would book future losses. In fact, that standard said that you didn't recognise those losses no matter how likely they were to be. It was trying to measure and adopt a neutrality of measures so that you can compare organisation to organisation. The stresses that the organisation had were about lending concentration and about funding gap and the disclosures of the ... in the financial statements were quite comprehensive and the reader could see what this level of concentration was and the level of funding gap that was supporting it. Whether those assets were going to be recoverable if the situation worsened was not something that the financial statement nor the auditor was trying to purport to display.

So, I do understand that it is a challenge but they are complex statements, financial statements. And they're not simply a case of one measure, there's quite a lot of measures that are disclosed and the reader has to understand. So it's not a prediction of the future. I think people use it as an important element of the measure into the stewardship of the ... of the organisation and directors present information and, clearly, if they haven't presented it properly in accordance with their knowledge, or with the auditors challenge in relation to other information, then that will be a concern. But I think when you look at a set of financial statements you will understand that they are a historic set of information at a point of time, using a series of judgments. If the information was ... or if that data and those judgments were based on unreasonable data, then certainly the auditor would have an issue. But we had a situation which was very dramatic over periods of years ... after audited accounts and they couldn't have been contemplated in terms of the deterioration in asset values. So the fact that there was going to be further default and a recovery of assets and the extent of that, at that point in time, for instance at the end of 2007, couldn't have been contemplated in my mind and the events were so dramatic and the assets shifts ... the level of-----